Modest sequential Q4 revenue growth for IT cos: analysts

Headwinds from depreciation of the British pound (GBP) and other cross-currency movements may also negatively impact USD revenues by 30-50 basis points for the said quarter.PTI | April 15, 2016, 09:20 IST

According to a Kotak Institutional Equities report, margins will improve for most companies after Chennai floods-led decline in the December quarter, whereas about 2 per cent depreciation in the rupee will also help.

"We expect March quarter results and management commentary to lend comfort on 2016-17 moderated estimates. Portfolio of clients and the ability to participate in digital(projects) will significantly influence growth of IT companies in the current fiscal," it added.

Emkay Equity Research said more clarity on demand trend is required to conclude that "the turnaround" or acceleration in the US dollar revenue growth for the sector will continue given challenges in the BFSI, telecom and energy verticals.

Investors would also watch out for the outlook on business from Europe as growth in recent quarters has been declining in local currency terms for many tier I companies, it added.

Also, the impact of ongoing mergers and acquisitions on demand in select verticals like healthcare and pharma from clients would also be keenly watched, analysts said.

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After PSU banks, the government is likely to infuse capital in two chronically ill telecom PSUs BSNL and MTNL, and the Union Cabinet is likely to take a decision on 4G spectrum allocation to them by the third week of the current month after DoT places the note before it for consideration.

At a high-level meeting at the PMO late Tuesday, it was also decided that the two telcos will frame a Voluntary Retirement Scheme (VRS) to reduce their employee strength, which will be followed by a reduction in the retirement age to 58.